Gold Prices Continue to Fall in the face of Positive Bond Yields
December 13, 2024 (Investorideas.com Newswire) Investorideas.com (www.investorideas.com), a go-to platform for big investing ideas releases market commentary from Quasar Elizundia,Expert Research Strategist at Pepperstone
"Gold prices are on track to close the week under pressure, marking their second consecutive session of losses. XAU/USD has fallen by nearly 0.9%, once again dropping below the key $2,700 per ounce level. This trend reflects a challenging environment for the precious metal, driven by adjustments in U.S. bond yields and expectations surrounding the Federal Reserve's monetary policy.
The 10-year Treasury bond yield climbed to approximately 4.35%, after starting the week around 4.15%. This increase is largely fueled by market reassessments regarding potential FED rate cuts for 2025, amid a backdrop of complex inflation data. On one hand, U.S. headline inflation met expectations, but producer inflation surprised by rising at its fastest pace in four months. These developments deepen uncertainty over the scale of projected cuts, pressuring gold, which as a safe-haven asset lacks comparative yield against instruments like bonds.
Looking ahead to next week, investor attention will focus on the Federal Reserve meeting. While market consensus anticipates a 25 basis point cut, the economic projections and the "dot plot" will be at the forefront and could provide greater clarity on the monetary policy outlook for 2025. In this context, gold's movements will remain closely tied to monetary policy expectations and their impact on bond yields.
In conclusion, gold faces a challenging medium-term outlook. The FED's ability to manage inflation will be pivotal in shaping the future performance of the yellow metal."
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